Directive increases oversight of bills that rely on electronic systems

December 14, 2012

Federal officials, in an apparent effort to clamp down on Medicare fraud and abuse, are tightening scrutiny of the growing numbers of doctors who rely on electronic medical records to bill for their services.

The Centers for Medicare and Medicaid Services has directed its auditors to look more closely to make sure the systems are properly documenting the services being paid for by the government. The new policy, announced in November, went into effect earlier this week.

At issue is the impact electronic medical records can have on billing for doctor visits. Doctors must choose one of five escalating payment levels, known as “Evaluation and Management” codes that best reflect the amount of time spent with a patient as well as the complexity of the care.

Medical groups argue that computers make it easier for them to document all of the work they do, which leads to higher codes and fees. But officials worry that the software also can be manipulated to inflate bills — a practice known as “upcoding.”

The stakes are high. Medicare spent more than $33.5 billion in 2010 using these numeric codes for services ranging from routine doctor office visits to outpatient hospital or nursing home care. More than half the doctors billing Medicare were using electronic records in 2011, and that number has since grown further, officials said.

CMS officials would not comment directly on the new policy, but said their purpose was partly to remind doctors that they must document that all billed medical care was necessary. The directive discourages the use of check-off lists that the agency said gather information “primarily for reimbursement purposes.” These sorts of records “generally do not provide sufficient information to adequately show” that a doctor visit was necessary, CMS said.

Dr. Stephen R. Levinson, a Connecticut physician and expert on medical coding, said that “this is another way of saying that cloned documentation won’t be approved for payment,” said Levinson.

Michelle Dougherty, director of research and development for the American Health Information Management Association, said the new directive “will help shape billing practices.” She said it was an “important clarification” that has identified weaknesses in billing using the software in electronic records systems. The group, which boasts about 64,000 members, has strongly supported more guidance from the government about what is proper as medicine enters the digital era.

Dr. David Kibbe, a senior advisor to the American Academy of Family Physicians on digital medicine, said the digital records systems can be misused in order to promote higher billing. “I don't know how extensive a problem this represents,” he added. “Perhaps no one does.”

The Medicare billing process has come under heightened scrutiny in the wake of the Center’s "Cracking the Codes"[4] series, published in September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees—and strongly suggested that the rapid growth in the use of electronic health records[5] and billing software has contributed to the higher charges.

The Center’s year-long examination also identified a wide range of costly billing errors and abuses that have plagued Medicare for years—from confusion over how to pick proper payment codes to outright false charges.

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care. CMS has since provided about $4 billion to medical professionals who made the switch.

Yet late last year, the Department of Health and Human Services Office of Inspector General said its contractors had detected overbilling and would begin investigating “potentially improper payments” linked to electronic medical records. The office also advised doctors they could be held accountable if the codes they used didn’t “accurately reflect the services they provide.”

William Mahon, a Virginia expert on health care fraud, called the new CMS directive a “big deal.” He said federal officials have realized they must strike a balance between encouraging doctors to adopt the new technology and preventing them from using it to game the system. “This will create a lot of waves,” Mahon said.

Joe Ferro, a Florida billing consultant who serves on a panel on fraud and abuse for the trade association Healthcare Information and Management Systems Society, or HIMSS, said that one of the selling points for electronic health records was their ability to offer powerful tools for documenting medical care. Now the government appears to be restricting the use of the tools. “That’s the way I read this,” he said.

Many experts believe electronic health records hold great potential to keep people healthier and the shift from paper to digital medical records has enjoyed strong political support in Congress. Yet in recent months Republicans have begun to question the billions in tax dollars spent on the program. Funds for the conversion are part of the nearly $800 billion economic stimulus package passed by Congress in February 2009.